Ramp up seen as theme parks draw in crowds

Tuesday 1st of May 2018

An increase in visitation is expected to drive gaming business at Resorts World Genting this year, although analysts say the two key attractions in its multi-billion dollar revamp are unlikely to be available until the end of this year.

Genting Malaysia, the country’s only casino operator, is nearing completion of the Genting Integrated Tourism Plan, which included an upgrade to hotel facilities, more retail and casino space, the Skytropolis indoor theme park and a much anticipated outdoor theme park in a venture with Twentieth Century Fox.

The company expects to invest a total of RMB10.4 billion ($2.68 billion) in the project, more than double its initial projections.

Genting has operations in the U.K.; U.S; Bahamas and Egypt, though gets the bulk of its revenue from its Malaysian operations. It says it expects the new attractions to pull in more tourists from home, but also plans to step up its marketing efforts to expand into regional markets.

“The completion of the GITP expansion will elevate RWG’s position as a premier integrated resort and destination of choice in the region,” the company said.

In Q4, Resorts World Genting attracted 6.7 million visitors, an increase of 34 percent on the same period last year, while its hotels enjoyed a 97 percent occupancy rate.

Revenue gained 11 percent increase in the period to RM2,544.0 million, however adjusted EBITDA was down 10 percent to RM669.6 million, due mainly to expenses related to the roll out of new facilities.

“Looking forward, management will tailor its marketing efforts to draw foreign visitation in FY18 when the indoor theme park is reopened in the 2H and the 20th Century Theme Park opens in end-2018,” TA Securities said in a note. “More importantly, we expect the increase in visitation to drive the gaming business volume higher this year.”

AllianceDBS said the results were better than it had been expecting, though it cautioned that it may take longer than expected for the group to optimize the return on the GITP, especially given the late rollout of the key attractions.

“Stronger-than-expected visitations and higher-than-expected return from its GITP investment could provide upside potential to our earnings forecasts,” it said.

The brokerage estimates visitation in 2019 is likely to hit 25 million, up from 21.7 million in 2017.

The group has been progressively rolling out upgrades since the end of 2016, when it launched its Sky Avenue and Sky Plaza shopping malls. It opened the Genting Highlands Premium Outlets in June last year and opened all levels of the Sky Casino by Q3 2017. The first and second floors cater to mass, while third and fourth are reserved for VIP visitors.

“We believe that the RM10.4 billion GITP makeover will come with 200 new gaming table capacity situated in Sky Plaza, up 36 percent from 550 gaming tables currently,” AllianceDBS notes.